Fed's Bullard wants to drop core inflation as tool

WASHINGTON (MarketWatch) - The Federal Reserve should drop its long-standing focus on core inflation - which strips out volatile food and energy prices - because the concept no longer has much meaning, said James Bullard, the president of the St. Louis Fed, on Wednesday. "I...argue that many of the old arguments in favor of a focus on core inflation have become rotten over the years," Bullard said in a speech to the Money Marketeers of New York University. The consensus of economists has been that headline inflation is too volatile for policy, but Bullard said Fed officials should simply take this volatility into account. Bullard said that core inflation is not a good predictor of future headline inflation. "The FOMC needs to get a better playbook on this question so that the committee can reconnect with American households, who see prices changes daily in many of the items the committee seems to exclude from consideration in making monetary policy," Bullard said. He urged the central bank to adopt an explicit target in terms of headline inflation.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.